Tel Aviv/Cairo  - Israel is not prepared to accept continuous rocket fire on its citizens, Foreign Minister Tzipi Livni said Thursday, as the Israeli military readied itself for action against Palestinian militants following a green light for action from the Israeli cabinet.

But in an indication that Israel could find itself fighting on two fronts, Israeli media reported Thursday night that Lebanese troops discovered seven Katyusha rockets near the border with Israel. The rockets, which were defused, were on the verge of being fired, possibly overnight, the reports said.

Livni's comments were echoed by Defence Minister Ehud Barak, who warned that the Islamist Hamas movement, which controls the Gaza Strip and which Israel sees as responsible for the rockets fire, would pay a "heavy price" if the rocket fire continued.

Prime Minister Ehud Olmert used an interview with the Dubai-based al-Arabiya channel on Thursday to appeal to Gaza residents to request Hamas to "stop it," referring to the Hamas rocket attacks on Israel.

"I say to you in a last minute call, 'stop it'," Olmert said in the interview. "Stop it, you the citizens of Gaza - you can stop it."

Military Chief of Staff Gabi Ashkenazi also issued a public warning, telling graduating air force pilots that "the current situation cannot continue and we will need to use all our might to hit the terror infrastructure and to create a new secure situation around the Gaza Strip."

The army, with the air force playing a central role, was "ready and prepared" to carry out any operation required of it, Lieutenant-General Ashkenazi said.

However, even as Israeli leaders were issuing warnings, Barak ordered that the crossing points into the Gaza Strip be opened on Friday to allow aid into the salient.

Having the crossings opened has been a major demand of Hamas, but Israel has said they can be opened only if no rockets are launched.

The remarks Thursday by the three Israeli leaders and by the military chief came a day after Gaza militants pummelled Israel with over 80 rockets and mortars, and the Israeli inner, or security, cabinet, decided that Israel would act against the rocket fire at a place, time and extent of its own choosing.

Hamas said the rocket fire was in response to Israel's killing Tuesday night of three militants who were trying to plant a bomb on the fence separating Israel and the Gaza Strip.

Gaza militias have launched over 160 rockets and mortars at the Jewish state since a six-month truce came to an end last Friday. Israel, for its part has launched airstrikes at rocket-launching squads.

"Enough is enough," Livni said in Cairo after meeting President Hosny Mubarak. "We cannot accept this situation, and this situation will change."

She said Hamas, which controls the Gaza Strip, was responsible for the situation in the Gaza Strip "and has to understand that there is a price to its decisions."

Hamas, she continued, needed to understand that it would pay for "its use of force."

"If Hamas thinks that by use of terrorism it can improve the conditions of the truce, it is mistaken," she said, in reference to reports that the Islamic group is angling for another ceasefire, but on new, enhanced, terms.

Israeli media reported Thursday morning that the military operation against the militants would get under way once the stormy weather in the region clears, and when other, unspecified, factors permitted, and would be conducted mainly through airstrikes.

Both the Ynet news site and the Jerusalem Post paper quoted military sources as saying Israel did not intend to reconquer the Gaza Strip, but did intend to pressure the militant groups.

Israel launched an airstrike against a militant group Wednesday night, killing one suspected militant who was thought to have been firing mortars at the Kerem Shalom border crossing with Israel.

On Thursday Israeli aircraft dropped leaflets on southern Gaza Strip warning it would destroy underground smuggling tunnels that link the territory with Egypt.

More than 400 tunnels have been dug recently between Rafah city in southern Gaza Strip and Egypt, and are used to smuggle fuel and goods into the Gaza Strip.

Residents of Rafah said that thousands of leaflets were dropped on their border town in the morning hours, giving the tunnel-owners 48 hours to shut the underground passages, or else face having them destroyed.

At the same time, militants fired 16 mortars and rockets at southern Israel.

One shell hit a terminal at the Erez Crossing point on Gaza's northern border, just as a group of Palestinian Christians were passing through on their way to join in Christmas festivities in Bethlehem.

There were no injuries, but Israel closed the terminal after the pilgrims had passed through. (dpa)